US importers and drayage operators need to be more proactive documenting what they believe are unfair detention and demurrage (D&D) charges, speakers said Thursday during a JOC.com webcast.
At the same time, beneficial cargo owners (BCOs) need to work closely with steamship lines and marine terminal operators to confront inefficiencies in appointment systems and at terminal gates to avoid demurrage charges altogether, the speakers told the webcast, TPM20: What We Missed — Trucking and Intermodal Outlook.
The goal isn’t necessarily to extend free time — the number of days BCOs and truckers are given to return containers before charges are assessed — but to not impose D&D charges in the first place, the executives, representing the shipper, drayage, and logistics sectors, said.
Shippers and truckers have been raising alarms on how blank sailings linked to the coronavirus disease 2019 (COVID-19) will cause a rash of detention penalties between $100 to $200 per day if it remains difficult to return empty containers to marine terminals.
Shipping lines shouldn’t charge truckers and BCOs when they can’t access marine terminals because of closed gates or congestion, they said, but truckers also should stop overbooking appointments that lead to unused appointment times, contributing to inefficiencies.
Shippers have long complained about allegedly unreasonable D&D charges, but the issue has ballooned in recent weeks as coronavirus mitigation measures distort cargo flows and, in some cases, prevent the timely pickup and return of equipment.
Three weeks ago, CMI West, a Los Angeles drayage operator owned by NFI Industries, had empty containers sitting in its yard that couldn’t be returned to ports because enough vessels hadn’t arrived or unloaded full TEU from China, thanks to blanked sailings and the shutdown of production facilities in China.
Now the tables have turned, and the drayage operator can’t get those empty containers into port terminals, said Robert Loya, vice president of CMI West. Meanwhile, ports are concerned about getting containers out of terminals, as US retailers and manufacturers fail to pick up containers, Loya said. “We want to return [the empty containers], and we can’t get them back in. We’re having verbal disputes at the gates; we’re having to retain documentation.”
For a drayage carrier, that’s “very onerous,” he said. “I have 700 cans [containers] between our yard and our customer facilities at this moment.”
To prevent demurrage disputes, the speakers advised BCOs and truckers to retain all documentation relating to the container, from emails to photographs of long truck lines outside port terminals to screenshots of computer screens showing terminal gate appointment times.
“You should be able to tell the ocean carrier, ‘Look, this is my first available appointment. Extend my free time,’” Loya said.
Rachael Acker, logistics director at Wolverine Worldwide, a footwear company in Rockland, Michigan, said her company has “an internal tracking system at the container level. All documentation related to any given container is uploaded and saved to that container. We can readily access it.”
No (free) time to waste
Shippers and truckers, some of whom have accused marine terminals and carriers of using demurrage and detention fees as revenue generators, argue they shouldn’t have to pay the fees if factors out of their control prevented the pickup of cargo or return of equipment.
Shipping lines and marine terminals counter the fees are meant to encourage better cargo flow. “If you fill up a terminal with empties, you don’t have enough space to handle the containers that are coming in. That’s the issue,” Ed DeNike, president of SSA Containers, told JOC.com last month.
The disruption and congestion related to the pandemic only highlights the need for a standard US policy, the speakers said.
“The faster the Federal Maritime Commission (FMC) could embrace some of the positions they’ve taken” in a proposed interpretive rule addressing fair demurrage and detention charges, the better, said Rich Roche, vice president of international transportation for Mohawk Global Logistics in Syracuse, New York. “We’d all benefit from a more formal posture on this.”
The FMC is preparing a final rule that would establish a platform for BCOs to file complaints about fees and provide a framework to determine their reasonableness on a case-by-case basis. The agency is reviewing comments on its proposals received last September and October before making a final decision.
No timetable has been set on when a decision will be made, although the commission wrote in a March 25 statement “given the evolving supply chain developments and the public interest in the proposed rule, the Commission will expedite its review and decision process.”
Shippers importing goods and their truckers can’t simply wait for the FMC to issue its decision, speakers said. “What you can do is try to protect yourself,” said Loya. “You have to retain the documentation to prove there were no appointments available to return the container. Even then, the steamship line will tell you they don’t control the terminal. But they need to get involved.”
Shippers and drayage truckers can help too, but not by abusing terminal appointment systems. Too many carriers book several appointments for one container to ensure they can deliver the container, Loya said. “They’re going to swallow up as many appointments as they can,” he said. “They need to cancel those appointments so they’re available to other motor carriers.”
Carrier scheduling of pickups and deliveries is an issue as well, said Roche. “Frequently at inland rail terminals we work on a first-available mentality rather than a last-free-day mentality” when it comes to moving containers, he said. “We’re looking for our motor carriers to be more proactive and not pick everything up on the last free day.”
Longer free time isn’t the answer, said Acker. “We go for free time to protect ourselves, but ultimately we’re looking to move our freight as quickly as possible,” she said.
“There should be a reasonable amount of free time, and we need to work with the carriers and terminals to come up with those sweet spots,” said Acker.
If the FMC adopts proposals on when detention and demurrage charges are applied against free time, “we wouldn’t need to protect ourselves so much,” said Lori Fellmer, vice president of logistics and carrier management at BassTech International, which develops and supplies specialty raw materials such as organic and inorganic chemicals to manufacturers.
While awaiting that decision, all parties involved in the container transfer need to work better together at solving a problem that has increasingly bedeviled them since at least the 2014 West Coast port labor dispute, the speakers said. From blanked sailings to closed gates to containers picked up for delivery at the last minute, there’s plenty of blame to share for inefficiencies.
Fellmer advises BCOs to pick up the phone no matter what, even if there is no prior relationship between the BCO and terminal operator, ocean carrier, or customs official. Afterward, Acker recommends sending an email with a recap of the conversation to establish a digital trail in case there is a dispute later.
“Everybody gets up in the morning wanting to do a good job and help their customers,” Fellmer said. “If you’ve got a problem, pick up a phone and make a call, talk to the customer service people at the terminal, talk to the trucker, talk to the driver. Often things can be resolved.”